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Balance Transfer

The process where a borrower  transfers his/her outstanding principal amount to another bank or financial institute primarily for a better rate of interest and also better features.

Almost every type of loan - , personal, home, business,auto,mortgage loan has a balance transfer facility and almost all financial institutes have this facility.


For example if  Mr. Raj has a personal loan for Rs. 10, 00,000 for tenure of 5 years at 12.99% interest rate, his monthly EMI comes to Rs. 22,748. The total interest he would pay for the duration of his loan will amount to Rs. 3,64,877. If after 1 year Mr.Raj go for a balance transfer and the rate of interest is now reduced to 10.99%, the principal outstanding on his loan is Rs. 8, 48,091. A balance transfer of the outstanding principle if rounded off to Rs. 8,50,000, his monthly EMIs will drop to Rs. 21,965 .while your total interest payable will drop to Rs. 2,04,499. For the first year Mr.Raj would have already paid back Rs.1,21,067 which meant another Rs. 2,43,810 was remaining. But with balance transfer his total interest now stands at Rs. 2,04,299 which means a saving of about Rs. 39511.


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